CFA Centre for Financial Market Integrity Issues Finalized Asset Manager Code of Professional Conduct.

CHARLOTTESVILLE, Va. -- Code Developed for Improving Investor Confidence by Enhancing Ethical Behavior of Investment Management Firms

The CFA Centre for Financial Market Integrity, the thought-leadership and policy-setting arm of CFA Institute, today released the final version of its Asset Manager Code of Professional Conduct, which sets forth global ethical and professional standards for firms that manage clients' assets as separate accounts or pooled funds, including hedge funds and mutual funds. The code supports investor protection by encouraging firms to adhere voluntarily to a strict set of ethical standards.

"The Asset Manager Code of Professional Conduct addresses the lapses that have undermined investor confidence in the asset management business," said Kurt Schacht, JD, CFA, executive director of the CFA Centre. "When firms adopt the code, they will be making a strong statement as to the importance of ethical behavior in the investment industry."

The Asset Manager Code was developed for firms that may not have a code of ethics in place or that are not required to register with a regulator, such as hedge funds. For those institutional asset managers that may already have a conduct code in place, the code can be used to evaluate their own practices. In some cases, the code requires firms to go above and beyond what is required by law and/or regulation.

"Local law and regulation should be seen as the lowest common denominator of behavior to which everyone must comply," said Ann Yerger, executive director, Council on Institutional Investors. "Ethical codes are something every investment firm and every investment manager should have place because effective self regulation, that which exceeds minimum requirements set by law, adds to the effectiveness and efficiency of the markets."

The code provides asset managers with specific and practical guidelines in six main areas, designed to apply to all facets of the manager-client relationship:

1. Loyalty to clients. The code states that asset managers must maintain their independence and objectivity and put client interests first. It specifies, for instance, that asset managers should refuse to participate in any business relationship or accept any gift that could reasonably be expected to affect their independence, objectivity or loyalty to clients.

2. The investment process. For instance, asset managers must use reasonable care and exercise prudent judgment when managing client assets and must ensure that investments made on behalf of clients are suitable for them.

3. Trading. The code requires managers to seek best execution for client trades, only use commissions generated by client transactions to purchase research, and develop polices to ensure fair allocations of trades among client accounts.

4. Compliance. This includes identifying a compliance officer responsible for administering the Code and related policies and procedures.

5. Performance and valuation. Asset managers must, for example, present performance information that is fair, accurate, complete, and timely and must use fair market price to value client holdings.

6. Disclosure. This includes disclosing any conflicts of interest, disciplinary actions taken against the manager, relevant risk factors, and management fees and other costs.

The Asset Manager Code was originally released as a draft exposure in November 2004 and was open for comment until December 31, 2004. During the comment period, the CFA Centre received more than 35 submissions from 11 different countries. The revised code reflects changes that were made prior to the comment period, taking into consideration questions posed by constituents.

To view a copy of the code, please visit http://www.cfainstitute.org/cfacentre/positions/ pdf/asset_manager_code.pdf.

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About the CFA Centre for Financial Market Integrity

The CFA Centre for Financial Market Integrity is the research and policy center of CFA Institute, the global, non-profit professional association that administers the prestigious Chartered Financial Analyst(R) (CFA)(R) program worldwide. Created to develop timely, practical solutions to global capital market issues, the CFA Centre advances investors' interests by promoting the highest standards of ethics and professionalism within the investment community worldwide. Past standards and guidelines developed by CFA Institute - standards that will now be overseen by the CFA Centre for Financial Market Integrity - include the Global Investment Performance Standards (GIPS)(R), AIMR-Performance Presentation Standards (AIMR-PPS)(R), Research Objectivity Standards, Soft Dollar Standards and Trade Management Guidelines.

About CFA Institute

CFA Institute is the global, non-profit professional association that administers the CFA curriculum and examination program worldwide and, through its CFA Centre for Financial Market Integrity, sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has 76,000 members in 117 countries. Its membership includes the world's 64,000 CFA charterholders, as well as 131 affiliated professional societies in 52 countries and territories. CFA Institute is headquartered in Charlottesville, Va., USA, with additional offices in London and Hong Kong. CFA Institute was known as AIMR (Association for Investment Management and Research) from 1990 to early 2004, and before that was two separate organizations whose roots go back to 1947. More information may be found at www.cfainstitute.org or by calling 1-800-247-8132 or 1-434-951-5499.